Risk Off As Employment Costs Surge: This Is Where Wages Supposedly Rose The Most

Tyler Durden's picture


While earlier today initial claims disappointed modestly to the upside, the economic print the market has been fascinated by is the otherwise C-grade economic indicator released by the BLS, the Employment Cost Index, which is quite a backward looking (today's release looked at Q2) at wages, salaries and benefits. The reason it is fascinated by it is that, supposedly, total employment costs rose the most in 6 years, with wages rising the most since Q3 2008 and benefits: the most since Q2 2011. And the reason why the risk switch has been pushed into the Off position is because this alleges that wages are finally rising, something which the Fed did not know yesterday, and which will make the hawkish case that much stronger.

So where did the wages and benefits rise the most? Here is the full breakdown by industry:


And by occupation.


Of course, the paradox is that while BLS is reporting surging labor costs (with a quarter lag), it is also reporting concurrent real hourly wages which continue to decline.

Luckily, we will know the full story tomorrow when the BLS releases the far more important jobs data for July, which will have updated average hourly and weekly earnings data. Don't be surprised if it rejects everything that the BLS just reported today.

Meanwhile, the market is in risk off mode.

Stocks are sliding


as are bonds... (and gold)

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Thu, 07/31/2014 - 09:08 | 5026790 SheepDog-One
SheepDog-One's picture

Wages? You don't need no stinkin' wages!

Thu, 07/31/2014 - 09:13 | 5026798 Headbanger
Headbanger's picture

Installation, maintenance and repair occupation costs rose the most.

Gee, I wonder why?

Could it be nobody wants to get their dainty little bankster hand dirty anymore fixing the toilet?

Or moar like there's no capex spending so Fix It Again Tony.

Thu, 07/31/2014 - 09:20 | 5026849 philipat
philipat's picture

Right. So this, together with Portugal, Argentina, Israel, Ukraine, Iraq etc. would explain why Gold is getting monkey-hammered again. They truly have no shame..

Thu, 07/31/2014 - 09:31 | 5026887 wallstreetapost...
wallstreetaposteriori's picture

SO let me get this straight... gold sells off realized inflation?  WTF.

Thu, 07/31/2014 - 09:37 | 5026895 philipat
philipat's picture

Precisely. This gets more Orwellian by the day.....

Unless tomorrows BLSBS data is going to be epicly terrible, in which case, da boyz like to get PM's down in advance so that any upside is from a previously supressed level.

Thu, 07/31/2014 - 09:25 | 5026863 Sudden Debt
Sudden Debt's picture

No, the machines are idle so now is the thime to do the maintenance and installation is the same thing.

That trend can keep up for 4 months and after that, it also drops silent.

It's a typical phenomem for a industry that is grinding to a halt.

Thu, 07/31/2014 - 09:08 | 5026792 I am a Man I am...
I am a Man I am Forty's picture

a banker's suicide is news but Gaza isn't?

Thu, 07/31/2014 - 09:35 | 5026904 Ms. Erable
Ms. Erable's picture

Around here, news of banker suicides - and stories of the creative ways in which they off themselves - is always welcome.

Thu, 07/31/2014 - 09:52 | 5026969 I am a Man I am...
I am a Man I am Forty's picture

I'm with you but TD seems to be intentionally avoiding the subject for some reason (not completely).  Look at how they are covering Ukraine vs. Gaza.  Something's up.  Don't know what.

Thu, 07/31/2014 - 12:15 | 5027649 Ms. Erable
Ms. Erable's picture

Just a guess, but ZH is still (nominally) a financial blog; the situation in the Ukraine has more far-reaching, long-run implications than those of the Ashkenazi tribe killing off a portion of the Semitic tribe.

Thu, 07/31/2014 - 12:05 | 5027603 sun tzu
sun tzu's picture

Who gives a flying fuck about gaza

Thu, 07/31/2014 - 09:10 | 5026796 Sudden Debt
Sudden Debt's picture



Thu, 07/31/2014 - 09:25 | 5026866 Sudden Debt
Sudden Debt's picture

are you still allowed to snitch like this?

Thu, 07/31/2014 - 09:10 | 5026797 Stuck on Zero
Stuck on Zero's picture

There's a big difference between employment costs and what an employee takes home.  The government sees to that.

Thu, 07/31/2014 - 11:35 | 5027448 PT
PT's picture

You're allowed to have more money but you're not allowed to choose how to spend it.

Thu, 07/31/2014 - 09:10 | 5026799 LawsofPhysics
LawsofPhysics's picture

Healthcare costs?!?!?!?


Ignoring the 800 lb gorilla in the room again?  fuckers.

Thu, 07/31/2014 - 09:13 | 5026818 pods
pods's picture

Quit hatin bro!  Chalky is killin it, all the way down.

Wait till the next mandate goes through. lolsville.


Thu, 07/31/2014 - 09:19 | 5026839 BandGap
BandGap's picture

No shit, we're seeing the tip of the shitberg here. The effects are 1-2 years off, when they go into full swing.

Three packs of Pall Malls a day and a dozen donuts, with triple by-pass scheduled next week.

Thu, 07/31/2014 - 10:02 | 5027003 pods
pods's picture

Pall Malls are the AK-47 of smokes!

Thu, 07/31/2014 - 11:16 | 5027338 blazinrabbit
blazinrabbit's picture

Then non filtered Camels must be the Ebolo of smokes!

Thu, 07/31/2014 - 09:10 | 5026800 JamesH
JamesH's picture

Is the cost increase down to increasing healthcare costs?


Thu, 07/31/2014 - 09:11 | 5026804 Notsobadwlad
Notsobadwlad's picture

Glad they had that "goal seek" button added at the BLS, otherwise they would never be able to get the numbers straight for the case for crashing the economy.

Or did Goldman just feed them the numbers, again?

Thu, 07/31/2014 - 09:13 | 5026812 ejmoosa
ejmoosa's picture

Are health insurance costs paid by an employer part of total employment costs?

That might just be the worst raise employees have ever gotten.

Getting sick of the centrally planned economy yet?


Thu, 07/31/2014 - 09:25 | 5026864 McCormick No. 9
McCormick No. 9's picture

Obamacare costs plus Fed-flation = rate increase plus unemployment

Thu, 07/31/2014 - 09:12 | 5026814 NoDebt
NoDebt's picture

This actually is problematic for the Fed.  Wage inflation is the only inflation they've ever cared about.

Thu, 07/31/2014 - 09:15 | 5026827 fonzannoon
fonzannoon's picture

Luckily for the fed, I don't know anyone, minus some .gov employees, who are finding themselves with higher wages. You?

Thu, 07/31/2014 - 09:18 | 5026837 NoDebt
NoDebt's picture

You mean higher healthcare costs counted as wages?  Yes, I know quite a few.  Everyone, actually.

Thu, 07/31/2014 - 09:27 | 5026876 CheapBastard
CheapBastard's picture

Amgen firing over 2,800 peeples….MSFT firing over 18,000 peeples….the entire IT tech industry firing over 48,000 first half of this year according to NPR ….these are solid Middle Class jobs…..being replaced by minimum wage low level jobs looks like …poor paying jobs that cannot support the hefty weight of a 3.5% down mortgage, maintenance, prop taxes, Obamacare, postal rate increases, and so on.

Thu, 07/31/2014 - 09:43 | 5026934 yogibear
yogibear's picture

So many tech/engineering jobs still going to India.

Thu, 07/31/2014 - 09:44 | 5026943 philipat
philipat's picture

Courtesy of The NSA, US Foreign Policy and the Fascist state....?

Thu, 07/31/2014 - 09:55 | 5026975 ejmoosa
ejmoosa's picture

What we need is an executive order that stops these layoffs...

For the greater good.

Thu, 07/31/2014 - 10:19 | 5027065 SumTing Wong
SumTing Wong's picture

Oh shit, then they are reading "Atlas Shrugged" as a playbook? Luckily they haven't seen the end of the story yet. I know many who are "going Galt," and the underground economy is alive and well where I am. 

Thu, 07/31/2014 - 09:13 | 5026817 FrankieGoesToHo...
FrankieGoesToHollywood's picture

I would like to see the graphs appended with governement worker employment cost changes.

Thu, 07/31/2014 - 09:13 | 5026820 101 years and c...
101 years and counting's picture

rising costs = lower earnings = more layoffs = even deeper recession.  

good job fed and obamacare.  if destroying the bottom 80% of the population was the goal, you get an A++.

Thu, 07/31/2014 - 09:20 | 5026848 Space Animatoltipap
Space Animatoltipap's picture

It indeed looks like a perfect storm is rising. Stagflation seems to be the natural consequence prior to collapse. Or war and big austerity in an attempt to take everything outside of the national house.

Thu, 07/31/2014 - 09:15 | 5026829 papaswamp
papaswamp's picture

Healthcare cost bitchez?

Thu, 07/31/2014 - 09:17 | 5026831 Last of the Mid...
Last of the Middle Class's picture

Actually heard a talking head on fox say that wages rising is the true metric of inflation the fed is looking for. In other words there is no inflation until wages start to go up. That is unbelievable, TARP, TBTF, QE out the ass forever, Stock buybacks courtesy of the Fed, nope, but wages go up and that's inflation. There is evil amongst us.


Thu, 07/31/2014 - 11:11 | 5027320 blazinrabbit
blazinrabbit's picture

I think it's true. The Fed is only concerned about wage inflation; every other category has an alternative. Ketchup is a vegetable, no? Don't want to buy gas, ride a bike.

There is no wage inflation, except in China.

Thu, 07/31/2014 - 09:20 | 5026835 NOZZLE
NOZZLE's picture

The only "employent cost" that surged was the cost of health insurance, see other ZeroHedge article this morning on this very subject.  Feeling the full effects of Obango care yet?  

I'm planted in foriegn country laughing at this nonesense.

FoX is almost as worthless as any other network with the same stooges telling us the opposite of what we already know to be the truth.

Thu, 07/31/2014 - 09:19 | 5026841 Duffy
Duffy's picture

So are all those fresh off the boat IT guys from India, who are basically 70% of the people on the bus to the train each morning - are they actually making more than the Americans who repeatedly apply to the same job?


anyway I suspect these numbers are not beyond criticism.


How much is obamacare?  Like stuck says, difference between cost of having an employee and what the employee gets to take home and spend on curry powder.

Thu, 07/31/2014 - 09:20 | 5026850 Duffy
Duffy's picture



I think this article is a bit of a misfire...

Thu, 07/31/2014 - 09:19 | 5026843 OnceandForever
OnceandForever's picture

2% for the last 12 months...sorry...nothing to see here...move along.

Thu, 07/31/2014 - 09:20 | 5026845 Shizzmoney
Shizzmoney's picture

A) Healthcare cost is part of the equation here; CA premiums up 88% on avg in 2014, for example.  Also, the interest rate on credit cards and student loans and mortgages is also up.

B) What also proves this is the fact discretionary spending is stagnant or waning.  

This is what the rentiers want.  You to make money working your ass off, and then taking that hard earned dough and shuffling it to them.

Higher wages are what is needed for the American economy; but the corporations will respond with layoffs instead of increased incomes for their consumers because, well, corporations are amoral beasts.

Thu, 07/31/2014 - 09:48 | 5026958 BurningFuld
BurningFuld's picture

What you are trying to say is the amount of money the average schmuck has to pay to large corporations keeps going up.

It's almost like they have the power to legislate these things.

Thu, 07/31/2014 - 10:19 | 5026846 Shizzmoney
Shizzmoney's picture

This is definitely via healthcare costs; my paycheck proves that!

Thu, 07/31/2014 - 09:19 | 5026847 NoWayJose
NoWayJose's picture

Well I guess I am unlucky - I see inflation in the things I buy while there is no inflation for the things that the Fed buys - and now I get paid the same salary as four years ago while everyone (?) else gets wage increases. Sure...

Thu, 07/31/2014 - 09:22 | 5026853 Wahooo
Wahooo's picture

Bonds haven't inflated?

Thu, 07/31/2014 - 09:21 | 5026852 icanhasbailout
icanhasbailout's picture

Chart claims IT work is paid ~12% more than it was a mere quarter ago. While I would love that to be true, I have seen no sign of increasing IT demand.

Thu, 07/31/2014 - 10:21 | 5027077 Shizzmoney
Shizzmoney's picture

That's because the majority of that work is outsourced to Singapore and India.


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